UK bakers face dilemma as sugar supply runs dry

04 December, 2010

ByGeorgi Gyton

Bakers looking to negotiate new sugar contracts are being told by suppliers that they have nothing to sell them, as Europe faces massive shortages of white sugar. The lack of availability, coupled with the impact of bad weather in cane-growing countries, such as Thailand and Brazil, has pushed global sugar prices up to 30-year highs.

One bakery manufacturer, which supplies the major multiples, told British Baker he’d spoken with a number of major suppliers, including Tate & Lyle and British Sugar, as he had hoped to negotiate a new contract for the New Year. “All of them have indicated that they have no extra sugar to sell me,” he said. Fortunately, he said, he has sugar left from his current contract, but he believes other bakers will have problems when it comes to arranging new contracts. “The EU needs to raise the quota for domestic sugar production, to alleviate the situation,” he said.

British Baker understands that British Sugar is not in a selling position at the moment, but the company declined to comment on the current market situation.

Last month, Tate & Lyle announced it would be putting up its prices by €176 per tonne from 3 January 2011, as it concluded that, to secure supply, it had no choice but to pay higher prices. The firm said white sugar prices across the globe were trading at 50-100% higher than those reported in the EU, so importers and their customers outside the EU were all paying higher prices and attracting sugar to their markets ahead of the EU.

There is a global supply/demand deficit, said Ben Eastick, director at speciality sugar company Ragus. “EU consumption is well above the current EU beet production quota, with the shortfall to be met by imported cane sugar. But due to the current world market price, cane sugar is not being offered to the lower-priced EU market.”

Richard Shepherdson, MD at sugar merchant and marzipan confectionery manufacturer Shepcote, said the firm is not currently having difficulty supplying its bakery customers, but it believes the situation will be very tight from June/July onwards next year. “There will be a lack of availability in the market. It’s primarily white sugar that’s affected, but it will have a knock-on effect to brown sugar – which is refined from white sugar – as well.”